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Krugman today – Government Spending in the Crisis

02 Feb
Not hard to follow the trend.
Republican/conservatives excluded, of course. “Squiggly lines are supposed to mean something???”
I’ll try to make it simple for our challenged republican “friends”.
’92 —- democrat—- spending goes starts to go down as a percentage of GDP
2000 —- republican —- spending starts to go up. Finishes with it skyrocketing during the financial crisis.
Late 2009 —- democrat —- After Obama does what’s necessary to get the monster republican screw-up somewhat under control, the spending starts to trend down.
What the hell is it these idiot republicans keep screaming about? They pull every obstructionist trick they possibly can think of, and this administration is still turning it around.

Government Spending in the Crisis

Mostly a note to myself. Not long ago, the usual suspects were going on and on about how government spending had soared under Obama, pointing to spending as a share of GDP. Some of us tried to point out that this bump represented two temporary factors: 1. GDP was depressed thanks to the crisis, so the spending share was correspondingly elevated 2. Emergency aid programs, notably unemployment benefits, were up because of the crisis. The implication of this argument was that the government spending share would decline as the economy recovered.

Conservatives were, of course, having none of it — Obama was permanently enlarging the government to European size. So, how’s it going?

In the figure below the blue line shows government spending at all levels as a share of GDP; the red line shows the share of potential GDP — what we’d be producing at normal employment — as estimated by the Congressional Budget Office; it’s lower than the first line because the economy is still operating well below capacity.
 
Down we come.
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Posted by on February 2, 2013 in Economy, Politics

 

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